Police officer Ali al-Raiby told reporters at the scene that some sort of a bomb had exploded in a street packed with pedestrians and workers in the northern Baghdad suburb on Wednesday.
Aljazeera's correspondent reported that the explosion occurred on Abd al-Aziz Street in the Adhamiyah district in Baghdad.
AFP reports that witnesses said the car exploded just after a convoy of sports-utility vehicles passed, missing the targeted vehicles but causing several deaths among Iraqi bystanders.
A Reuters cameraman saw several dead being taken to a nearby hospital. The staff confirmed the bodies had been brought in from the blast scene.
Kufa gun battles
In the city of Kufa, some 100km south of Baghdad, fighters loyal to Shia leader Muqtada al-Sadr clashed on Wednesday with US occupation forces near a mosque.
Hospital officials said at least three Iraqis were killed and 16 others wounded.
Explosions rocked the industrial sections of Kufa, where Shia leaders have been struggling to save a shaky ceasefire. Many of the injured suffered shrapnel wounds from a mortar round which missed a US convoy, witnesses said.
Gunfire reverberated through the largely deserted streets as fighters loyal to al-Sadr took positions near the mosque, where firefights have raged over the past several days.
Clashes have broken out in the city nearly every day since Shia leaders announced an agreement by al-Sadr to end a two-month-old standoff with the Americans and in the twin city of Najaf.